How the Capitalists Conceal Their Profits

Published:First published inPravdaNo. 94, July 12 (June 29), 1917.

      Published according to thePravdatext.Source:Lenin
	  Collected Works,

      Progress Publishers,1977,

      Moscow,Volume 25,

      pages140-141.Translated:Transcription\Markup:R. CymbalaPublic Domain:Lenin Internet Archive.  

      2002You may freely copy, distribute,
	display and perform this work, as well as make derivative and
	commercial works. Please credit “Marxists Internet
	Archive” as your source.•README

CONCERNING THE ISSUE OF CONTROL

Howmuch they talk about control! And howlittleit all
      means. How they dodge the issue by resorting to general phrases,
      grandiloquent turns of speech, and solemn “projects”
      doomed for ever to remain projects only.

Nowthe issue is that unless commercial and bank secrecy is
      abolished, and unless a law is immediately passed making the
      books of commercial firms open to the trade unions, all phrases
      on control and all projects for it will be so much meaningless
      verbiage.

Hereis a small but instructive illustration. A comrade who is a
      bank employee has sent us the following information showing how
      profits are concealed in official reports.

OnMay 7, 1917,Vestnik
	Finansov[1]No. 18
      published a report of the Petrograd Loan and Discount Bank. The
      report gives the bank’s net profit as 13,000,000 rubles (the
      exact figure is 12,960,000; we shall use round numbers in the
      text and give exact figures in parentheses).

Oncloser scrutiny, a well-informed person will see at once that
      that isnot the whole profit at alland that a consider
      able part of the profit is cleverly concealed under other items,
      so that no “tax”, “compulsory loan” and,
      in general, no financial measure will ever bring it out unless
      commercial and bank secrecy is completely abolished. Indeed, the
      amount of 5,500,000 rubles is given as reserve capital. Profits
      are quite often entered for concealment as so-called reserves,
      or reserve capital. If I am a millionaire who has made a profit
      of 17,000,000 rubles and wants to reserve 5,000,000, I only
      have to enter this 5,000,000 as “reserve capital” to
      do thetrick! In this way Idodgeall the various laws on
      “state control”, “state taxation of
      profits” and so on.

Again,the report indicates slightly less than 1,000,000 rubles
      (825,000) as money made in interest and commissions. “The
      question is,” writes the bank employee, “what are the sums
      that generally constitute the bank’s profit, since the money
      made in interest is not listed under profits??”

Moreover,the sum of 300,000 rubles, listed as remaining profit
      made in previous years,is not included in the total
      profits!Together, then, with the foregoing item, we have
      more than another sweet million in profit hidden
      away. Similarly, the sum of 224,000 rubles of “unpaid
      dividends to shareholders”is missingin the
      total profit, although everyone knows that dividends are paid
      out of net profits.

Furthermore,the report lists the sum of 3,800,000 rubles as
      “carry-overs”. “Whoever has not taken a direct
      part in the business will find it hard to establish what these
      carry overs are,” the comrade writes. “One thing is
      certain: in preparing a report, one can easily conceal a part of
      the profit by listing it under ’carry-overs’ and then
      transferring It to ’where it belongs’.”

Tosum up. The profit has been listed as 13,000,000 rubles, but,
      in point of fact, it must be somewhere between 19 and 24
      million, or almost 80 per cent profit on a basic capital of 30
      million.

Isn’tit obvious that the government’s threats to the
      capitalists, the government’s promises to the workers, the
      government’s Bills and laws aimed at taking 90 per cent of the
      profits of the big capitalists are useless, absolutely use less,
      as long as there is commercial and bank secrecy?

[1]VestnikFinansov, Promyshlennosti i Torgovli(Finance, Industry
and Trade Messenger)—a weekly journal published by the Ministry
of Finance in St. Petersburg from November 1883 to 1917. It
published government decisions, economic articles, and surveys.